Community submission: Patents play a key role

The latest patent infringement lawsuit between electronics giants Apple and Samsung ended last month with the award of $119.6 million to Apple. The jury found that Samsung had infringed upon two Apple patents. But it also awarded $158,400 to Samsung for Apple’s violating one of its patents.

Many people do not understand how patents work or the rationale for them. Patents go back to the Founding Fathers, a number of whom were inventors and entrepreneurs. They understood that in order to build an advanced society, they had to ensure that ideas and inventions would be rewarded and protected.

To achieve this, they wrote intellectual property protection into the Constitution. Congress enacted the first patent law in 1790, and President George Washington signed it into law. It remains the basis of our system today.

A patent for a new software system or prescription drug grants a property right to the inventor for a period of 20 years from the date on which the application for it was filed. Under certain conditions, the terms of the patent can be extended or adjusted.

The rationale for granting patents is to foster innovation by providing a limited monopoly to inventors. Since inventors secure the exclusive rights to their inventions for 20 years, this encourages risk taking. It also provides a reward in the marketplace for the costs of developing the invention.

A specific incentive embodied in the patent system is the encouragement of research and development spending. Without patents, research and development spending—the lifeblood of all developed nations—would be significantly reduced or eliminated. And this would limit technological advancement.

In addition, patents make new inventions available to society. And when patents expire for some items, such as best-selling prescription drugs like Lipitor, generics enter the market at much lower prices.

Patents are advantageous for individuals of limited means who have patentable inventions. They can use the exclusive rights to their inventions to become a licensor to a larger firm and still reap the benefits of their labor.

The founders could have never imagined the astonishing feats that subsequent generations of American innovators would achieve. Their foresight has paid huge dividends to society and has made our economy the greatest the world has ever known.

Wayne Curtis, Ph.D., is a former superintendent of Alabama banks and Troy University business school dean. He is retired from the board of directors of First United Security Bank. Email him at wccurtis39@gmail.com.